UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-15403
A. Full title of the plan and the address of the plan, if different
from that of the Issuer named below:
M&I Retirement Program
B. Name of the issuer of the securities held pursuant to the plan and
the address of its principal executive office:
MARSHALL & ILSLEY CORPORATION
770 North Water Street
Milwaukee, Wisconsin 53202
Financial Statement and Exhibits
--------------------------------
(a) Financial Statements:
---------------------
M&I Retirement Program
----------------------
(1) M&I Retirement Plan
-------------------
Report of Independent Registered Public Accounting Firm.
Statements of Net Assets Available for Benefits
as of December 31, 2004 and 2003.
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 2004 and 2003.
Notes to Financial Statements.
Supplemental Schedule, Form 5500, Schedule H,
Part IV, Line 4(i)
Schedule of Assets (Held at End of Year)
as of December 31, 2004.
(2) Employee Stock Ownership Plan
-----------------------------
Report of Independent Registered Public Accounting Firm.
Statements of Net Assets Available for Benefits
as of December 31, 2004 and 2003.
Statements of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2004 and 2003.
Notes to Financial Statements.
(b) Exhibits:
---------
23 Consent of Independent Registered Public Accounting Firm -
Deloitte & Touche LLP
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
Financial Statements for the Years Ended
December 31, 2004 and 2003, Supplemental
Schedule as of December 31, 2004, and
Report of Independent Registered Public
Accounting Firm
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
TABLE OF CONTENTS
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Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits -
December 31, 2004 and 2003 2
Statements of Changes in Net Assets Available for Benefits -
Years Ended December 31, 2004 and 2003 3
Notes to Financial Statements 4-10
SUPPLEMENTAL SCHEDULE:
Form 5500, Schedule H, Part IV, Line 4i -
Schedule of Assets (Held at End of Year)
as of December 31, 2004 11
All other schedules required by Section 2520.103-10 of the
Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security
Act of 1974 have been omitted because they are not applicable.
1
[Deloitte & Touche LLP Letterhead]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator of the
M&I Retirement Program - M&I Retirement Plan:
We have audited the accompanying statements of net assets available for
benefits of the M&I Retirement Program - M&I Retirement Plan (the "Plan")
as of December 31, 2004 and 2003, and the related statements of changes in
net assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
The Plan is not required to have, nor were we engaged to perform, an audit
of its internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Plan's internal control over financial reporting. Accordingly, we express
no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December
31, 2004 and 2003, and the changes in net assets available for benefits for
the years then ended in conformity with accounting principles generally
accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedule of
assets (held at end of year) as of December 31, 2004 is presented for the
purpose of additional analysis and is not a required part of the basic
financial statements, but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. This schedule
is the responsibility of the Plan's management. Such schedule has been
subjected to the auditing procedures in our audit of the basic 2004
financial statements and, in our opinion, is fairly stated in all material
respects when considered in relation to the basic financial statements
taken as a whole.
/s/ Deloitte & Touche LLP
June 28, 2005
2
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2004 AND 2003
_______________________________________________________________________
2004 2003
------------- -------------
Cash $ -- $ --
Investments, at fair market value:
Master trust 877,480,909 758,182,955
Loans to participants 538,136 89,566
------------- -------------
Total investments 878,019,045 758,272,521
Receivables:
Employee contributions 1,365,310 1,125,223
Employer contributions 39,282,557 37,131,866
------------- -------------
Total receivables 40,647,867 38,257,089
------------- -------------
NET ASSETS AVAILABLE FOR BENEFIT $ 918,666,912 $ 796,529,610
============= =============
See notes to financial statements.
3
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2004 AND 2003
_______________________________________________________________________
2004 2003
------------- -------------
CONTRIBUTIONS:
Participants $ 35,382,404 $ 31,442,074
Employer 39,052,790 37,175,015
Participant rollovers 6,898,543 2,629,660
------------- -------------
Total contributions 81,333,737 71,246,749
INVESTMENT INCOME (LOSS):
Income from Master Trust 79,753,296 142,678,199
Net depreciation in fair
value of investments -- (93,224)
Interest and dividends -- 10,701
------------- -------------
Net investment income 79,753,296 142,595,676
DEDUCTIONS:
Benefits paid to participants (48,776,364) (43,998,367)
Administrative expenses (16,515) (19,913)
------------- -------------
Total deductions (48,792,879) (44,018,280)
TRANSFERS IN FROM M&I EMPLOYEE
STOCK OWNERSHIP PLAN -- 210,752
TRANSFERS IN DUE TO PLAN
MERGERS (NOTE 1) 9,843,148 --
------------- -------------
NET INCREASE IN ASSETS
AVAILABLE FOR BENEFITS 122,137,302 170,034,897
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 796,529,610 626,494,713
------------- -------------
End of year $ 918,666,912 $ 796,529,610
============= =============
See notes to financial statements.
4
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004 AND 2003
---------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
-----------------------
The M&I Retirement Program - M&I Retirement Plan (the "Plan") is a
defined contribution plan which is subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Marshall & Ilsley Corporation (the "Corporation") is the
Administrator of the Plan and the Marshall & Ilsley Trust Company, a
subsidiary of the Corporation, is the Trustee and recordkeeper of the
Plan. The Trustee holds all investments of the Plan.
The following descriptions of the Plan are provided for general
information purposes only. More complete information regarding the
Plan's provisions may be found in the plan document.
Plan Transfer and Merger - During 2004 the Corporation purchased
Advanced Financial Solutions, Inc. Effective December 1, 2004, the
assets of the Advanced Financial Solutions, Inc. 401(k) Plan were
merged into the Plan. Assets merged at December 1, 2004 were
$9,843,148.
Eligibility - All employees of the Corporation and subsidiaries who
have completed one year of continuous service, as defined by the
Plan, and have elected to become participants are eligible to receive
employer profit sharing contributions. Employees may elect to make
deferrals upon the date of hire.
Contributions - Upon election to participate, the participant
designates under a salary reduction agreement the amount of the
annual contribution (0% to 50% of compensation, as defined), subject
to IRS limitations. Employees may change the amount of the annual
contribution as often as they wish. Participants who will reach at
least age 50 by the end of the plan year have the ability to make
pre-tax 401(k) catch-up contributions, subject to IRS limitations.
Employer profit sharing contribution percentages are discretionary
and are determined by the Board of Directors on an annual basis. The
Corporation made a profit sharing contribution of 8% of eligible
compensation during the years ended December 31, 2004 and 2003.
Vesting - All employee contributions and related income are
fully vested at all times. Employer profit sharing
contributions vest at the earliest of the following dates:
a. The date the participant completed at least 5 years of
Vesting Service, as defined by the Plan.
b. The date of the participant's death while employed by the
employer or of an affiliated employer.
c. The date of participant's attainment of age 65 or earlier
disability.
d. The date of termination of the Plan (or partial
termination as to participants affected thereby) or the
date of complete discontinuance of contributions by the
employer at a time when the participant is employed by
the employer or by an affiliated employer.
5
Benefit Payments - Upon termination, death, retirement, in the event
of disability, as defined, or financial hardship, a participant or
beneficiary is entitled to withdraw his or her vested interest in a
lump sum payment. Participants who are 59 or older may take pretax
withdrawals for any reason. In addition, after-tax contributions made
before 1987 and former Valley Bancorporation employee balances from
the former Valley plan are available for distribution.
Participant Accounts - Individual accounts are maintained for each of
the Plan's participants. Each participant's account is credited with
the participant's contribution and allocations of the Plan's income
(loss) and any related administrative expenses based on participant
earnings or account balances as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
Investment Options - Participants may direct their pretax and
Corporation profit sharing contributions and any related earnings
thereon into eighteen investment options designated by the Plan's
investment committee in 1% increments. Participants are able to
change their investment elections daily.
Due to the merger of the Advanced Financial Solutions, Inc. 401(k)
Plan, the Plan held amounts in various funds that were no longer
investment elections for participants at December 31, 2004. The
funds allowed for Advanced Financial Solutions, Inc. 401(k) Plan
were:
Causeway International Value Fund
Dodge & Cox Stock Fund
Dreyfus Appreciation Fund
Goldman Sachs Growth Opportunities Fund
Hotchkis & Wiley Small Cap Value Fund
PIMCO Total Return Fund
SEI Stable Assets Fund
Vanguard 500 Index Fund
Vanguard Lifestrategy Conservative Growth Fund
Vanguard Lifestrategy Growth Fund
Vanguard Lifestrategy Income Fund
Vanguard Lifestrategy Moderate Growth Fund
2. SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
Basis of Accounting - The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted
in the United States of America.
Accounting Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires the Plan's management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements, and reported amounts of
revenues and expenses during the reporting periods. Actual results
could differ from these estimates.
6
Contributions - Contributions from employees are recorded in
the period the employer makes corresponding payroll deductions.
Contributions from the employer are accrued based upon amounts
required to be contributed as determined by the Plan.
Investments and Income Recognition - Investments are stated at fair
market value. The Trustee of the Master Trust determines the fair
value of the Trust's investments by reference to published market
data except for the Marshall & Ilsley Stable Principal Fund, which is
valued at contract value (see Note 4), which approximates fair value.
Each security is valued at the last sales price reported by the
principal security exchange on which the issue is traded. Securities
which are traded over-the-counter are valued at the mean between the
latest bid and asked prices. Mutual funds are valued at the last
market quotation by reference to published market data. Participant
loans are valued at unpaid principal amounts, which approximates fair
value. Purchases and sales of securities are recorded on a trade-
date basis. Interest income is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date.
Administrative Expenses - Significantly all administrative expenses
for the Plan were paid by the Plan for the years ended December 31,
2004 and 2003. In 2004 and 2003, trustee fees were paid by the
Corporation.
Payment of Benefits - Benefit payments to participants are recorded
upon distribution.
Risks and Uncertainties - The Plan invests in a Master Trust, which
invest in various securities. Investment securities are exposed to
various risks including, but not limited to, interest rate, market
and credit risks. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that
changes in the values of investment securities will occur in the near
term and such changes could be material to the financial statements.
7
3. INVESTMENTS
-----------
The Plan's investments are commingled with the assets of the M&I
Retirement Program - Employee Stock Ownership Plan in the M&I
Retirement Program Master Trust ("Master Trust"). Investment income
of the Master Trust is allocated to participating plans based on the
individual participant balances.
The assets of the Plan are commingled and are not segregated in the
accounts of the trusts. The market value of the assets held in the
Master Trust as of December 31, 2004 and 2003 is as follows:
2004 2003
-------------- --------------
M&I Retirement Program Master Trust
Investments:
Cash $ -- $ 19,184
Marshall Funds Mutual Funds:*
Intermediate Bond 93,390,687 98,197,687
Equity Income 25,733,834 21,439,613
Mid-Cap Growth 45,180,332 40,016,594
Mid-Cap Value 9,210,171 --
Large Cap Growth & Income 96,457,763 92,452,859
International Stock 25,204,109 18,328,078
Marshall & Ilsley Growth
Balanced Fund * 84,258,194 70,369,252
Marshall & Ilsley Moderate
Balanced Fund * 1,483,550 --
Marshall & Ilsley Aggressive
Balanced Fund * 3,057,247 --
Marshall & Ilsley Aggressive
Stock Fund * 87,922,089 74,791,299
Marshall & Ilsley Diversified
Stock Fund * 5,480,544 --
Federated Max Cap Index Fund -- 125,646,671
Vanguard Institutional Index Fund 139,613,300 --
Managers Special Equity Fund 32,576,527 23,425,835
MFS Massachusetts Growth Fund 11,295,041 10,637,373
Nicholas Fund 40,267,514 34,925,114
M&I Stable Principal Fund * 83,676,660 71,861,889
Goldman Sachs Small-Cap Value Fund 9,794,802 --
Marshall & Ilsley Common Stock * ** 456,311,819 401,987,828
Accrued income 570,684 599,550
Pending trades (1,355,084) (1,119,105)
-------------- --------------
Total assets of the M&I Retirement
Program Master Trust $1,250,129,783 $1,083,579,721
============== ==============
* - Represents party-in-interest
** - Shares of M&I common stock held at December 31, 2004 and 2003
amounted to 10,295,660 and 10,454,952, respectively.
8
Allocations of the M&I Retirement Program Master Trust to
participating plans as of December 31, 2004 is as follows:
M&I Retirement Program -
M&I Retirement Plan $ 877,480,909 70.19%
M&I Retirement Program -
Employee Stock Ownership Plan 372,648,874 29.81
-------------- --------
Total Assets of the M&I Retirement
Program Master Trust $1,250,129,783 100.00%
============== ========
Allocations of the M&I Retirement Program Master Trust to
participating plans as of December 31, 2003 is as follows:
M&I Retirement Program -
M&I Retirement Plan $ 758,182,955 69.97%
M&I Retirement Program -
Employee Stock Ownership Plan 325,396,766 30.03
-------------- --------
Total Assets of the M&I Retirement
Program Master Trust $1,083,579,721 100.00%
============== ========
M&I Retirement Program Master Trust income and its allocation to the
participating plans for the year ended December 31, 2004 is as
follows:
Dividend and interest income $ 20,446,346
Net appreciation in the fair
value of investments, by type:
Mutual Funds 35,840,178
Common collective trusts 17,795,796
Common stock 61,607,314
--------------
Total M&I Retirement Master
Trust Income $ 135,689,634
==============
M&I Retirement Program -
M&I Retirement Plan $ 79,753,296 58.78%
M&I Retirement Program -
Employee Stock Ownership Plan 55,936,338 41.22
-------------- --------
Total Income of M&I Retirement
Program Master Trust $ 135,689,634 100.00%
============== ========
9
M&I Retirement Program Master Trust income and its allocation to the
participating plans for the year ended December 31, 2003 was as
follows:
Dividend and interest income $ 17,503,163
Net appreciation in the fair
value of investments, by type:
Mutual Funds 77,108,197
Common collective trusts 30,548,994
Common stock 116,282,706
--------------
Total M&I Retirement Master
Trust Income $ 241,443,060
==============
M&I Retirement Program -
M&I Retirement Plan $ 142,678,199 59.09%
M&I Retirement Program -
Employee Stock Ownership Plan 98,764,861 40.91
-------------- --------
Total Income of M&I Retirement
Program Master Trust $ 241,443,060 100.00%
============== ========
4. GUARANTEED INVESTMENT CONTRACTS
-------------------------------
The Master Trust invests in Employee Benefit Collective Funds that
invests in guaranteed investment contracts. Fully benefit-responsive
investment contracts are valued at contract value, which represents
the principal balance of the investment contracts, plus accrued
interest at the stated contract rate, less payments received and
contract charges by the insurance company. Under the terms of the
investment contracts, the crediting interest rate is determined semi-
annually based on the insurance company's applicable rate schedule.
The aggregate average yield of the investment contracts for the years
ended December 31, 2004 and 2003 was 4.00% and 4.33%, respectively.
The crediting interest rate for the investment contracts as of
December 31, 2004 and 2003 was 4.31% and 4.33%, respectively. The
fair value of the investment contracts as of December 31, 2004 and
2003 approximates the contract value. There are no limitations on
guarantees of the contracts.
5. INCOME TAX STATUS
-----------------
The Plan has obtained a determination letter from the Internal
Revenue Service dated November 26, 2002, approving the Plan as
qualified for tax-exempt status. The Plan has been amended since
receiving the determination letter. However, the Company and the
Plan Administrator believe that the Plan is currently designed and
operated in compliance with the applicable requirements of the
Internal Revenue Code and the Plan and related trust continue to be
tax-exempt. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
10
6. RELATED PARTY TRANSACTIONS
--------------------------
As of December 31, 2004 and 2003, investments were made in a master
trust, which includes common/collective trusts and mutual funds
managed by a subsidiary of the Corporation, as well as common stock
of the Corporation. These transactions were not considered
prohibited transactions by statutory exemptions under ERISA
regulations.
7. LOANS TO PARTICIPANTS
---------------------
The Plan does not offer new loans to active participants. All
existing loans are as a result of plan mergers due to acquisitions.
The loans are repayable through payroll deductions and were written
with original terms of one to twenty-five years. The interest rate
was based on prevailing market conditions and is fixed over the life
of the note. Interest rates on participant loans at December 31,
2004 and 2003 ranged from 4.00% to 11.00% and 5.75% and 11.00%,
respectively.
8. FORFEITURES
-----------
Forfeited nonvested accounts are used to reduce Corporation
contributions. During 2004 and 2003, $2,497,638 and $1,517,786 of
forfeitures, respectively were used to reduce Corporation
contributions. At December 31, 2004 and 2003, $2,063,936 and
$2,497,638 respectively were available to reduce future Corporation
contributions. These forfeitures relate to the nonvested portions of
the employer profit sharing contributions.
9. PLAN TERMINATION
----------------
Although it has not expressed any intention to do so, the Corporation
has the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions set forth in
ERISA. In the event that the Plan is terminated, participants would
become 100 percent vested in their account.
* * * * * *
SUPPLEMENTAL SCHEDULE FURNISHED
PURSUANT TO
DEPARTMENT OF LABOR'S RULES AND REGULATIONS
11
M&I RETIREMENT PROGRAM -
M&I RETIREMENT PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i - SCHEDULE OF ASSETS
(HELD AT END OF YEAR)
DECEMBER 31, 2004
___________________________________________________________________________
Issuer Description Fair Value
------------------- ------------------------------ ----------------
*Marshall & Ilsley Marshall & Ilsley Retirement
Trust Company Program Master Trust $ 877,480,909
*Marshall & Ilsley Loans to Participants
(interest rates ranging
from 4.00% to 11.00%) 538,136
--------------
Total assets (held at end of year) $ 878,019,045
==============
*Represents party-in-interest.
M&I RETIREMENT PROGRAM -
EMPLOYEE STOCK OWNERSHIP PLAN
Financial Statements for the Years Ended
December 31, 2004 and 2003, and Report of
Independent Registered Public Accounting Firm
M&I RETIREMENT PROGRAM -
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
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Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits -
December 31, 2004 and 2003 2
Statements of Changes in Net Assets Available for Benefits -
Years Ended December 31, 2004 and 2003 3
Notes to Financial Statements 4-9
All schedules required by Section 2520.103-10 of the Department
of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act 1974 have
been omitted because they are not applicable.
1
[Deloitte & Touche LLP Letterhead]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator of the
M&I Retirement Program - Employee Stock Ownership Plan:
We have audited the accompanying statements of net assets available for
benefits of the M&I Retirement Program - Employee Stock Ownership Plan (the
"Plan") as of December 31, 2004 and 2003, and the related statements of
changes in net assets available for benefits for the years then ended.
These financial statements are the responsibility of the Plan's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Plan is
not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits include
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Plan's internal control over financial reporting. Accordingly, we express
no such opinion. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December
31, 2004 and 2003, and the changes in net assets available for benefits for
the years then ended in conformity with accounting principles generally
accepted in the United States of America.
/s/ Deloitte & Touche LLP
June 28, 2005
2
M&I RETIREMENT PROGRAM -
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2004 AND 2003
_______________________________________________________________________
2004 2003
------------- -------------
Investments, at fair market value:
Master trust $ 372,648,874 $ 325,396,766
------------- -------------
Total investments 372,648,874 325,396,766
Receivables:
Employer contribution 11,957,582 11,112,565
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 384,606,456 $ 336,509,331
============= =============
See notes to financial statements.
3
M&I RETIREMENT PROGRAM -
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2004 AND 2003
_______________________________________________________________________
2004 2003
------------- -------------
CONTRIBUTIONS:
Employer $ 11,945,705 $ 11,156,606
INVESTMENT INCOME (LOSS):
Investment income from Master Trust 55,936,338 98,764,861
Other net investment loss -- (253,595)
------------- -------------
Net investment income (loss) 55,936,338 98,511,266
DEDUCTIONS:
Benefits paid to participants (19,777,825) (20,670,440)
Administrative expenses (7,093) (8,433)
------------- -------------
Total deductions (19,784,918) (20,678,873)
TRANSFERS TO M&I RETIREMENT PLAN -- (210,752)
------------- -------------
NET INCREASE 48,097,125 88,778,247
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 336,509,331 247,731,084
------------- -------------
End of year $ 384,606,456 $ 336,509,331
============= =============
See notes to financial statements.
4
M&I RETIREMENT PROGRAM -
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004 AND 2003
--------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
-----------------------
The Marshall & Ilsley Corporation (the "Corporation") formed on
January 1, 2002, the M&I Retirement Program - Employee Stock
Ownership Plan (the "Plan"), a defined contribution plan which is
subject to the provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). The Corporation is the
Administrator of the Plan and the Marshall & Ilsley Trust Company, a
subsidiary of the Corporation, is the trustee and recordkeeper of the
Plan. All investments of the Plan are held by the Trustee.
The following description of the Plan is provided for general
information purposes only. More complete information regarding the
Plan's provisions may be found in the Plan document.
Eligibility - All employees of the Corporation and subsidiaries who
have completed one year of continuous service and have elected to
participate in the employee deferrals offered in another corporation
plan, the M&I Retirement Program - M&I Retirement Plan are eligible
to participate in the Plan.
Contributions - The Corporation contributes an employer match that is
a percentage of the participants' contribution to the M&I Retirement
Program - M&I Retirement Plan. Such percentage is based on a scale
which increases with the annual rate of return on equity of the
Corporation. The maximum contribution is 50% of the participant's
contribution up to 6% of a participant's total eligible compensation,
and if the annual rate of return on equity is less than 11%, the
employer contribution is not required. For the years ended December
31, 2004 and 2003, the Corporation matched 50% up to 6% of eligible
compensation. Participants must have completed 1,000 hours of
service during the plan year and be employed on December 31 to
receive that year's employer matching contribution.
Vesting - A participant is 100% vested at all times.
Participant Accounts - Individual accounts are maintained for each of
the Plan's participants. Each participant's account is credited with
the Company's matching contribution and allocations of the Plan's
income (loss) and any related administrative expenses based on
participant's earnings or account balances as defined. The benefit
to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
5
Investment Options - The employer matching contributions are invested
in Marshall & Ilsley Common Stock within the M&I Retirement Program
Master Trust and is non-participant directed. Balances transferred
from merged plans that were originally in the form of Marshall &
Ilsley Common Stock and participants over the age of 55 are able to
direct their investments within the master trust.
Benefit Payments - Upon termination, death, retirement, disability,
as defined, or financial hardship, a participant or beneficiary is
entitled to withdraw his or her vested interest in a lump sum
payment. Participants who are 59 or older may take pretax
withdrawals for any reason. In addition, after-tax contributions
made before 1987 and former Valley Bancorporation employee balances
from the former Valley Bancorporation plan are available for
distribution.
2. SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
Basis of Accounting - The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted
in the United States of America.
Accounting Estimates - The preparation of financial statements in
conformity with accounting principals generally accepted in the
United States of America requires the Plan's management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements, and reported amounts of
revenues and expenses during the reporting periods. Actual results
could differ from these estimates.
Investments and Income Recognition - Investments are stated at fair
market value. The Trustee of the Master Trust determines the fair
value of the Trust's investments by reference to published market
data except for the Marshall & Ilsley Stable Principal Fund, which is
valued at contract value (see Note 4), which approximates fair value.
Each security is valued at the last sales price reported by the
principal security exchange on which the issue is traded. Securities
which are traded over-the-counter are valued at the mean between the
latest bid and asked prices. Mutual funds are valued at the last
market quotation by reference to published market data. Purchases
and sales of investments are accounted for on a trade-date basis.
Interest income is recorded as earned on the accrual basis. Dividend
income is recorded on the ex-dividend date.
Administrative Expenses - Significantly all administrative expenses
of the Plan were paid by the Plan for the years ended December 31,
2004 and 2003. Trustee fees were paid by the Corporation.
Payment of Benefits - Benefits paid to participants are recorded when
paid.
Risks and Uncertainties - The Plan invests in a Master Trust, which
invest in various securities. Investment securities are exposed to
various risks including, but not limited to, interest rate, market
and credit risks. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that
changes in the values of investment securities will occur in the near
term and such changes could be material to the financial statements.
6
3. INVESTMENTS
-----------
The Plan's investments are commingled with the assets of the M&I
Retirement Program - M&I Retirement Plan in the M&I Retirement
Program Master Trust ("Master Trust"). Investment income (loss) of
the Master Trust is allocated to participating plans based on the
individual participant balances.
The assets of the Plan are commingled and are not segregated in the
accounts of the trusts. The market value of the assets held in the
Master Trust as of December 31, 2004 and 2003 is as follows:
2004 2003
-------------- --------------
M&I Retirement Program Master Trust
Investments:
Cash $ -- $ 19,184
Marshall Funds Mutual Funds:*
Intermediate Bond 93,390,687 98,197,687
Equity Income 25,733,834 21,439,613
Mid-Cap Growth 45,180,332 40,016,594
Mid-Cap Value 9,210,171 --
Large Cap Growth & Income 96,457,763 92,452,859
International Stock 25,204,109 18,328,078
Marshall & Ilsley Growth
Balanced Fund * 84,258,194 70,369,252
Marshall & Ilsley Moderate
Balanced Fund * 1,483,550 --
Marshall & Ilsley Aggressive
Balanced Fund * 3,057,247 --
Marshall & Ilsley Aggressive
Stock Fund * 87,922,089 74,791,299
Marshall & Ilsley Diversified
Stock Fund * 5,480,544 --
Federated Max Cap Index Fund -- 125,646,671
Vanguard Institutional Index Fund 139,613,300 --
Managers Special Equity Fund 32,576,527 23,425,835
MFS Massachusetts Growth Fund 11,295,041 10,637,373
Nicholas Fund 40,267,514 34,925,114
M&I Stable Principal Fund * 83,676,660 71,861,889
Goldman Sachs Small-Cap Value Fund 9,794,802 --
Marshall & Ilsley Common Stock * ** 456,311,819 401,987,828
Accrued income 570,684 599,550
Pending trades (1,355,084) (1,119,105)
-------------- --------------
Total assets of the M&I Retirement
Program Master Trust $1,250,129,783 $1,083,579,721
============== ==============
* - Represents party-in-interest
** - Shares of M&I common stock held at December 31, 2004 and 2003
amounted to 10,295,660 and 10,454,952, respectively.
7
Allocations of the M&I Retirement Program Master Trust to
participating plans as of December 31, 2004 is as follows:
M&I Retirement Program -
M&I Retirement Plan $ 877,480,909 70.19%
M&I Retirement Program -
Employee Stock Ownership Plan 372,648,874 29.81
-------------- --------
Total Assets of the M&I Retirement
Program Master Trust $1,250,129,783 100.00%
============== ========
Allocations of the M&I Retirement Program Master Trust to
participating plans as of December 31, 2003 is as follows:
M&I Retirement Program -
M&I Retirement Plan $ 758,182,955 69.97%
M&I Retirement Program -
Employee Stock Ownership Plan 325,396,766 30.03
-------------- --------
Total Assets of the M&I Retirement
Program Master Trust $1,083,579,721 100.00%
============== ========
M&I Retirement Program Master Trust income and its allocation to the
participating plans for the year ended December 31, 2004 is as
follows:
Dividend and interest income $ 20,446,346
Net appreciation in the fair
value of investments, by type:
Mutual Funds 35,840,178
Common collective trusts 17,795,796
Common stock 61,607,314
--------------
Total M&I Retirement Master
Trust Income $ 135,689,634
==============
M&I Retirement Program -
M&I Retirement Plan $ 79,753,296 58.78%
M&I Retirement Program -
Employee Stock Ownership Plan 55,936,338 41.22
-------------- --------
Total Income of M&I Retirement
Program Master Trust $ 135,689,634 100.00%
============== ========
8
M&I Retirement Program Master Trust income and its allocation to the
participating plans for the year ended December 31, 2003 was as
follows:
Dividend and interest income $ 17,503,163
Net appreciation in the fair
value of investments, by type:
Mutual Funds 77,108,197
Common collective trusts 30,548,994
Common stock 116,282,706
--------------
Total M&I Retirement Master
Trust Income $ 241,443,060
==============
M&I Retirement Program -
M&I Retirement Plan $ 142,678,199 59.09%
M&I Retirement Program -
Employee Stock Ownership Plan 98,764,861 40.91
-------------- --------
Total Income of M&I Retirement
Program Master Trust $ 241,443,060 100.00%
============== ========
4. GUARANTEED INVESTMENT CONTRACTS
-------------------------------
The Master Trust invests in Employee Benefit Collective Funds that
invests in guaranteed investment contracts. Fully benefit-responsive
investment contracts are valued at contract value, which represents
the principal balance of the investment contracts, plus accrued
interest at the stated contract rate, less payments received and
contract charges by the insurance company. Under the terms of the
investment contracts, the crediting interest rate is determined semi-
annually based on the insurance company's applicable rate schedule.
The aggregate average yield of the investment contracts for the years
ended December 31, 2004 and 2003 was 4.00% and 4.33%, respectively.
The crediting interest rate for the investment contracts as of
December 31, 2004 and 2003 was 4.31% and 4.33%, respectively. The
fair value of the investment contracts as of December 31, 2004 and
2003 approximates the contract value. There are no limitations on
guarantees of the contracts.
9
5. NON-PARTICIPANT DIRECTED ACCOUNTS
---------------------------------
Information about the net assets as of December 31, 2004 and 2003 and
the significant components of the changes in net assets for the years
ended December 31, 2004 and 2003 relating to non-participant directed
balances is as follows:
2004 2003
------------- -------------
Investment in Master Trust $ 133,624,444 $ 110,109,187
Employer contribution receivable 9,584,531 9,219,522
------------- -------------
Total assets $ 143,208,975 $ 119,328,709
============= =============
Changes in assets attributable to:
Contributions $ 9,584,531 $ 9,219,522
Investment income from Master Trust 19,237,611 33,348,978
Benefit payments (4,436,129) (3,423,975)
Expenses (2,412) (2,840)
Transfers to participant
directed accounts (503,335) (53,055)
------------- -------------
Net increase 23,880,266 39,088,630
Balance, beginning of year 119,328,709 80,240,079
------------- -------------
Balance, end of year $ 143,208,975 $ 119,328,709
============= =============
6. INCOME TAX STATUS
-----------------
The Plan has obtained a determination letter from the Internal
Revenue Service dated November 26, 2002, approving the Plan as
qualified for tax-exempt status. The Plan has been amended since
receiving the determination letter. However, the Company and the
Plan Administrator believe that the Plan is currently designed and
operated in compliance with the applicable requirements of the
Internal Revenue Code and the Plan and related trust continue to be
tax-exempt. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
7. RELATED PARTY TRANSACTIONS
--------------------------
As of December 31, 2004 and 2003, investments were made in a master
trust, which includes common/collective trusts and mutual funds
managed by a subsidiary of the Corporation, as well as common stock
of the Corporation. These transactions were not considered
prohibited transactions by statutory exemptions under ERISA
regulations.
8. PLAN TERMINATION
----------------
Although it has not expressed any intention to do so, the Corporation
has the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions set forth in
ERISA.
* * * * * * *
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed by the undersigned thereunto
duly authorized.
M&I Retirement Program
/s/ Paul J. Renard
____________________________
Paul J. Renard
Senior Vice President,
Director of Human Resources
of the Marshall & Ilsley
Corporation and a Member
of the Committee of the
M&I Retirement Program
Date: June 28, 2005